The Fed could, in principle, sell some of the assets it has been buying -- but if these assets were liquid, the Fed wouldn’t have been buying them in the first place.

This particular little bit from Hassett is nonsense. The Fed is busy bringing the banking system's insolvency onto its own balance sheet. It won't be able to drain liquidity because it has/will have overpaid for the assets.

Tyler:You've got an excellent blog running here. You seem to be quite intelligent. Why then do you keep including the idiot Paul Krugman's in reading lists. If that's just for kicks illustrating how worthless Nobel Prizes (at least in Economics)are, I'm with you. Otherwise I think whatever that moron writes is sheer nonsense and garbage.